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CDHP The ever-rising costs of health care have had many employers asking tough questions. How is it possible to offer quality health care to my employees while still keeping the cost of benefits under control? One solution is to offer CDHP plans. Consumer Driven Health Plans (CDHPs) work in conjunction with high deductible health plans to give employees more control over their health care plans. With CDHPs, individuals decide how their health care dollars are spent. Consumer Driven Health Plan (CDHP) Components A CDHP is actually broken down into several parts. The first component is a high-deductible health insurance plan. This plan is then combined with one of several tax advantaged spending accounts, such as a Health Savings Account or a Health Reimbursement Account. There are also other tax-advantage accounts that can work to the advantage of both employer and employee. A Health Savings Account (HSA) is an account owned by an employee, which is used to pay for current or future medical expenses or retirement income. Both individuals and employers can make contributions to an HSA account. These accounts are portable and can be carried over each year. A Health Reimbursement Account (HRA) is similar in concept to an HSA, but the employer controls it. Employees cannot contribute to these accounts, which can be used to pay for qualified medical expenses, and unlike HSAs, insurance premiums. While not required to, most HRAs are linked with high-deductible plans. Another option similar to the above accounts is a Flexible Spending Account (FSA). FSAs are a type of cafeteria plan that employees can use to pay for qualified medical expenses on a pre-tax basis. These plans work in conjunction with other employer-sponsored health care plans, but do not have to be combined with high-deductible plans. Under these plans, employees reduce their taxable income and use this reduction to pay for expenses they would have otherwise used taxable dollars for. Employers also save, since matching payroll tax contributions to social security and Medicare, are also reduced. |
Additional Topics Consumer-Directed Health Plans Consumer-Driven Health Accounts Dependent Care Flexible Spending Accounts Flexible Health Spending Accounts Flexible Medical Expense Accounts Health Care Flexible Spending Accounts Health Reimbursement Arrangements IRS Section 125 Cafeteria Plans Medical Expenses and Income Tax Plan for Medical that Health Insurance Doesn't Cover Save 25% to 40% on Health Expenses Save on Co-Pays and Over-the-Counter Medications Save on LASIK and Orthodontic Costs Section 125 Plan Administration |
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